FOR IMMEDIATE RELEASE
Thursday, January 15, 2004
CALPROP REPORTS SECOND QUARTER RESULTS
Company Reports a Net Loss of $12,843,593 in the Second Quarter
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MARINA DEL REY, CA, January 15, 2004 -- Calprop Corporation (OTCBB:CLPO), a
California and Colorado home builder, in reporting financial results for the
three and six month periods ended June 30, 2003, today reported net losses from
operations for both of the aforementioned periods ended June 30, 2003.
"For the three and six month periods ended June 30, 2003, Calprop
incurred net losses of ($12,843,593) and ($12,430,249), respectively. Our
backlog decreased to $1,714,000 on 6 units, down 91.2% from $19,517,000 on 56
units a year ago. Currently, Calprop is developing five projects of which three
are close to completion as compared to seven projects at this time a year ago.
We have focused on retiring debt the past twelve months in order to strengthen
our balance sheet. Presently, we are investigating properties to acquire and
have entered escrow on three new properties, a 77 unit townhouse project in
Rohnert Park, California, a 117 lot development in Wildomar, California and a 43
lot development in Wildomar, California. The Rohnert Park project should
commence in February 2004. We continue to target another four acquisitions prior
to year's end. We entered escrow to sell 50 lots in the Saddlerock project in
Aurora, CO to a national builder and the escrow closed in August 2003. In
addition, the 117 lot development in Wildomar was placed in escrow as of
December 2003 and is also being sold to a national builder with an anticipated
closing date in March 2004. Furthermore, our lease ups of our ParcWest
Apartments in Milpitas, California have remained strong through June 2003 with
98.5% of 68 units leased. In October 2003, ParcWest Apartments was placed in
escrow to be sold with a estimated closing date of February 2004," said Victor
Zaccaglin, Calprop's chairman and chief executive officer.
For the second quarter, Calprop's revenues were $7.6 million, a
decrease of $35.5 million or 82.4% from $43.1 million of revenues in the second
quarter a year ago. The decrease in real estate sales for the three month period
of 2003 was primarily due to the lack of projects currently under development in
2003 compared to the active projects under development in 2002. In the second
quarter of 2003, the Company sold 21 homes with an average sales price of
$361,500, a 81.4% decrease in the volume of home sales compared to 113 homes
with an average sales price of $381,050 for the second quarter of 2002. Income
from development operations before recognition of impairment of real estate was
$255,552 for the second quarter, down $497,455 or 66.1% compared to $753,007 in
the prior year's quarter. Net loss for the second quarter of 2003 was
($12,843,593) or ($1.25) per share on 10,239,105 weighted average shares and
common stock equivalents for dilutive net income, compared with a net loss of
($1,224,951) or ($0.12) per share on 10,254,005 weighted average shares and
common stock equivalents for dilutive net income, in the same quarter a year
ago.
During the second quarter of 2003, the Company recorded an impairment
loss on real estate under development of $4,232,281 in the Saddlerock project.
The project consisted of 94 homes with five product lines in Aurora, Colorado.
The lack of demand of the product lines resulted in a slower absorption rate.
The Company introduced three new product lines and converted certain upgrades as
standards during the second quarter of 2002 to increase the absorption rate. The
introduction of the new product lines increased direct construction cost,
marketing, production overhead, and interest costs. In addition to increased
costs and slow absorption rates, the Company entered into escrow to sell 50
developed lots and as a result the Company recorded an impairment loss on real
estate under development.
Additionally, during the second quarter of 2003, the Company recorded
an impairment loss on real estate under development of $453,869 in the High
Ridge Court project which is located in Thornton, Colorado, as the absorption
rate was slower than anticipated. The decrease in absorption rate increased
marketing, production and interest costs and as a result the Company recorded an
impairment.
As of June 30, 2003, the ParcWest apartment project was 98.5% leased
and stabilized its operations. Based upon such operations, the Company tested
the project for recoverability and determined the carrying amount of the project
was not fully recoverable and recorded an impairment loss
of $1,342,316; the amount by which the carrying amount of the project exceeded
its estimated fair value as determined by a third party appraiser.
As of December 31, 2003, the Company had gross deferred tax assets of
$11,065,083 offset by a deferred tax asset valuation allowance of $11,065,083.
The Company has assessed its past earnings history and trends, sales backlog,
budgeted sales, and expiration dates of net operating loss carryforwards and has
determined that it is more likely than not that the $11,065,083 of deferred tax
assets will not be realized. As a result, the Company increased the valuation
allowance by $6,535,343 during the three months ended June 30, 2003.
For the year-to-date period, revenues were $12.2 million, down 81.1%
from $64.4 million in 2002. The decrease in real estate sales for the six month
period of 2003 was primarily due to the reduction in the number of active
projects available for sale in 2003 compared to active projects available for
sale in 2002. During the first six months of 2003, the Company sold 33 homes
with an average sales price of $368,600, a 80.7% decrease in the volume of home
sales compared to 171 homes with an average sales price of $376,300 for the six
months of 2002. Income from development operations before recognition of
impairment of real estate for the six months ended June 30, 2003, decreased to a
loss of ($275,127) or 132.5% from income of $847,781 in the prior year's period.
The significant decrease of income from development operations during the second
quarter of 2003 and six months ended June 30, 2003 resulted from a slower
absorption rate, fewer active projects, a lower average sales price and
increased production overhead costs. The company reported a net loss of
($12,430,249) or ($1.21) per share on 10,238,451 weighted average shares and
common stock equivalents for dilutive net income, for the six months ended June
30, 2002, a $10,937,852 decrease from the net loss of ($1,492,397) or ($0.15)
per share on 10,254,005 weighted average shares and common stock equivalents for
dilutive net income, in 2002.
General and administrative expenses decreased to $467,112 in the three
months ended June 30, 2003 from $521,006 in the corresponding period. For the
six months ended June 30, 2003, general and administrative expenses decreased to
$952,155 from $1,076,452 in the corresponding 2002 period. The decrease is due
to the focus efforts to decrease corporate overhead costs.
Calprop Corporation, based in Marina Del Rey, California, builds
quality homes in some of the most desirable communities in both Northern and
Southern California as well as the Colorado Denver Metropolitan area. The
company's common stock is traded on the OTCBB under the symbol CLPO.
- tables follow -
CALPROP CORPORATION
Balance Sheets
(Unaudited)
June 30, December 31,
2003 2002
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Investement in Real Estate:
Real estate development $ 13,308,057 $ 24,166,829
Rental property, (net of accumulated depreciation
of $268,125 and $121,875, respectively) 9,700,000 11,182,886
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Total Investment in Real Estate 23,008,057 35,349,715
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Other assets:
Cash and cash equivalents 1,574,686 3,444,541
Deferred tax asset -- 6,535,343
Other assets 728,197 745,347
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Total other assets 2,302,883 10,725,231
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Total assets $ 25,310,940 $ 46,074,946
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Liabilities and Stockholders' Equity:
Trust deeds and notes payable $ 14,420,211 $ 19,726,186
Related-party notes 13,865,168 13,987,634
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Total trust deeds, notes payable and 28,285,379 33,713,820
related-party notes
Accounts payable and accrued liabilities 1,824,436 2,724,856
Deposit -- 2,000,000
Warranty reserves 758,050 757,550
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Total liabilities 30,867,865 39,196,226
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Stockholders' equity:
Common stock, no par value
Authorized - 20,000,000 shares
Issued and outstanding -10,239,105 and 10,235,305
Shares at June 30, 2003 and December 31, 2002 10,239,105 10,235,305
Additional paid-in capital 25,850,776 25,849,446
Deferred compensation (28,600) (28,600)
Notes receivable from common stock sale (538,384) (527,858)
Accumulated deficit (41,079,822) (28,649,573)
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Total stockholders' equity (5,556,925) 6,878,720
------------ ------------
============ ============
Total liabilities and stockholders' equity $ 25,310,940 $ 46,074,946
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- more -
CALPROP CORPORATION
Statements of Operations
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
-------------------------------- --------------------------------
2003 2002 2003 2002
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Development operations:
Real estate sales 7,592,899 43,058,399 12,165,178 64,350,669
Cost of real estate sales 7,337,347 42,305,392 12,440,305 63,502,888
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Income from development operations before
recognition of impairment of real estate
255,552 753,007 (275,127) 847,781
Recognition of impairment of real estate
development (4,686,150) (1,832,225) (4,686,150) (1,832,225)
------------ ------------ ------------ ------------
(Loss) income from development operations (4,430,598) (1,079,218) (4,961,277) (984,444)
Income from investment in real estate venture -- 185,022 -- 109,253
Other income
Rental Income 258,745 -- 512,527 --
Gain on sale of investment in real estate -- -- 2,000,000 --
venture
Interest and miscellaneous 12,261 190,251 31,301 252,299
Management fee -- -- -- 207,182
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Total other income 271,006 190,251 2,543,828 459,481
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Other expenses:
Rental operating 163,187 -- 275,277 --
Recognition of impairment of rental property 1,342,316 -- 1,342,316 --
General and administrative 467,112 521,006 952,155 1,076,452
Depreciation 71,138 -- 142,275 --
Interest 379,930 -- 764,670 --
------------ ------------ ------------ ------------
Total Expenses 2,423,683 521,006 3,476,693 1,076,452
------------ ------------ ------------ ------------
Minority interests -- -- 764 235
(Loss) income before provision for income taxes (6,583,275) (1,224,951) (5,894,906) (1,492,397)
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Provision for income taxes 6,260,318 -- 6,535,343 --
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Net (loss) income ($12,843,593) ($ 1,224,951) ($12,430,249) ($ 1,492,397)
============ ============ ============ ============
Basic net (loss) income per share ($1.25) ($0.12) ($1.21) ($0.15)
============ ============ ============ ============
Diluted net (loss) income per share ($1.25) ($0.12) ($1.21) ($0.15)
============ ============ ============ ============
Weighted average number of common
shares and common stock equivalents
for dilutive net (loss) income 10,239,105 10,254,005 10,238,451 10,254,005
Units
single family 21 113 33 171
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total 21 113 33 171
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